Friday, February 19, 2010

Mustapa insists Kelantan can’t get oil royalty

Kelantan Umno chief Datuk Seri Mustapa Mohamed last night insisted the state is only entitled to compassionate payments rather than oil royalty demanded by its PAS government for energy extracted miles off its coast.

The International Trade and Industry Minister stuck to the government line when addressing a ceramah in response to the Jan 28 declaration by Umno veteran and founding Petronas chairman Tengku Razaleigh Hamzah that Kelantan had a right to the 5 per cent royalty.

“The royalty mentioned at the ceramah in Stadium Sultan Mohamad IV last month is not correct because in reality, there is no royalty, only a cash payment. That is if there is really oil or gas,” Mustapa said.

Razaleigh, who is Gua Musang MP, had said Kelantan’s entitlement came from provisions in the Petroleum Development Act 1974 for oil extracted off its coast and that compassionate payments are illegal under the law.

In his ceramah, Mustapa maintained the federal government’s argument that Kelantan’s rights was up to three nautical miles off its coast under national laws. Gas has been extracted in a joint development area by Malaysia and Thailand since 2005 after both agreed to end a dispute over overlapping exclusive economic zones in 1979.

“The country’s laws say three nautical miles. If oil is found there, then its mandatory to give 5 per cent with the money put into the state government’s accounts. Otherwise it’s just a compassionate payment (wang ihsan)

“The term wang ihsan means there is no problem to give or not to give as it is up to the discretion of the federal government,” Mustapa told a 2,000-strong crowd at the Kelantan Umno grounds.

The Umno-Barisan Nasional supporters who turned up to listen to him held up banners that read “Insya Allah... Wang Ihsan” and “Tok so caro hok Ku Li royak” (Ignore Ku Li’s statement) in a reference to the popular nickname for the Kelantan prince.

He told the crowd further that the Petroleum Development Act does not have the term oil royalty but only cash payment, adding the Kelantanese were not told everything about such terms and this has led to misunderstanding in the issue.

Mustapa said Prime Minister Datuk Seri Najib Razak felt it was his responsibility to provide wang ihsan to the Kelantanese people and has agreed to give 5 per cent of the value of gas production found in the PM301 development block.

The amount of RM20 million for the year 2008 will be distributed via the Federal Development Department next month, he said.

Mustapa said he was disappointed with the PAS government for accusing him of being a traitor and for betraying the state by not caring for his own state.

“I am sad because such baseless accusations were thrown at us. They don’t know that we work for the people and the state night and day. They (PAS government) forget who approved the development projects in the state like the stadium cafe, upgrading the airport, Universiti Malaysia Kelantan and the rest.

“I brought all these projects in. But now I am accused of being a traitor,” he added.

Malay rights group president Datuk Ibrahim Ali also addressed the Umno ceramah and noted the Kelantan oil royalty issue has now become a legal matter and it was up to the courts to resolve it.

“We have to understand that we are covered by international maritime laws. According to the laws, the government (Kelantan) is only eligible to receive 5 per cent of all oil and gas found within three nautical miles.

“There is a legal issue because the agreement does not say if the 5 per cent payment is for oil found 200 to 300 nautical miles,” said the Pasir Mas MP who was a deputy minister in charge of law during Tun Dr Mahathir Mohamad’s administration.

He quit Umno after a tiff when Tun Abdullah Ahmad Badawi was party president and prime minister. Ibrahim is now an Independent MP after campaigning on a PAS ticket in Election 2008.

The outspoken Ibrahim challenged the PAS government to resolve the issue by taking the matter to court and not make political capital from the dispute.

“At least then the people will not have headache just thinking about it,” he said, adding he believed PAS will not go to court as it is a powerful issue in the run-up to the 13th general elections.

“They will certainly use the issue to convince the people that the federal government is cruel,” Ibrahim added.

He noted the state government appeared to fear the dispensation of wang ihsan through federal agencies, saying “the way the federal government manages the distribution of money to the people will affect the position of the state government”.

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About Me

Mohd Kamal Abdullah frequently writes in Malaysiakini, MalaysiaToday and in the FORUM column of MALAYSIA CHAT www.malaysia-chat.com. Kamal holds a law degree and was active in Malaysian Politics (a component party of Barisan Nasional) until of late, to concentrate on pursuing a post-graduate law degree in United Kingdom.